Chapter 3:Project Integration

Management

Information Technology Project Management, Sixth Edition

Note: See the text itself for full citations.

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Describe an overall framework for project integration management as it relates to the other PM knowledge areas and the project life cycle

Explain the strategic planning process and apply different project selection methods

Explain the importance of creating a project charter to formally initiate projects

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Learning Objectives

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Describe project management plan development, understand the content of these plans, and review approaches for creating them

Explain project execution, its relationship to project planning, the factors related to successful results, and tools and techniques to assist in project execution

Describe the process of monitoring and controlling project work

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Learning Objectives (continued)

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Understand the integrated change control process, planning for and managing changes on information technology projects, and developing and using a change control system

Explain the importance of developing and following good procedures for closing projects

Describe how software can assist in project integration management

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Learning Objectives (continued)

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Project managers must coordinate all of the other knowledge areas throughout a project’s life cycle

Many new project managers have trouble looking at the “big picture” and want to focus on too many details (see opening case for a real example)

Project integration management is not the same thing as software integration

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The Key to Overall Project Success: Good Project Integration Management

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Develop the project charter: working with stakeholders to create the document that formally authorizes a project—the charter

Develop the project management plan: coordinating all planning efforts to create a consistent, coherent document—the project management plan

Direct and manage project execution: carrying out the project management plan by performing the activities included in it

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Project Integration Management Processes

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Monitor and control the project work: overseeing project work to meet the performance objectives of the project

Perform integrated change control: coordinating changes that affect the project’s deliverables and organizational process assets

Close the project or phase: finalizing all project activities to formally close the project or phase

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Project Integration Management Processes (continued)

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Figure 4-1. Project Integration Management Summary

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The Airbus A380 megajet project was two years behind schedule in Oct. 2006, causing Airbus’ parent company to face an expected loss of $6.1 billion over the next four years

The project suffered from severe integration management problems, or “integration disintegration...Early this year, when pre-assembled bundles containing hundreds of miles of cabin wiring were delivered from a German factory to the assembly line in France, workers discovered that the bundles, called harnesses, didn't fit properly into the plane. Assembly slowed to a near-standstill, as workers tried to pull the bundles apart and re-thread them through the fuselage. Now Airbus will have to go back to the drawing board and redesign the wiring system.”*

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What Went Wrong?

*Matlack, Carol. “First, Blame the Software,” BusinessWeek Online (October 5, 2006).

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Strategic planning involves determining long-term objectives, predicting future trends, and projecting the need for new products and services

Organizations often perform a SWOT analysis◦Analyzing Strengths, Weaknesses, Opportunities, and

Threats As part of strategic planning, organizations:◦ Identify potential projects◦Use realistic methods to select which projects to work on◦ Formalize project initiation by issuing a project charter

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Strategic Planning and Project Selection

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Figure 4-2. Mind Map of a SWOT Analysis to Help Identify Potential Projects

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Figure 4-3. Information Technology Planning Process

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Only one in seven product concepts comes to fruition; why is it that some companies like Proctor & Gamble, Johnson and Johnson, Hewlett Packard, and Sony are consistently successful in NPD? Because they use a disciplined, systematic approach to NPD projects

based on best practices Four important forces behind NPD success include the

following:1. A product innovation and technology strategy for the business2. Resource commitment and focusing on the right projects, or solid

portfolio management3. An effective, flexible, and streamlined idea-to-launch process4. The right climate and culture for innovation, true cross-functional

teams, and senior management commitment to NPD

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Best Practice

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There are usually more projects than available time and resources to implement them

Methods for selecting projects include:◦ Focusing on broad organizational needs◦ Categorizing information technology projects◦ Performing net present value or other financial

analyses◦ Using a weighted scoring model◦ Implementing a balanced scorecard

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Methods for Selecting Projects

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It is often difficult to provide strong justification for many IT projects, but everyone agrees they have a high value

“It is better to measure gold roughly than to count pennies precisely”

Three important criteria for projects:◦ There is a need for the project◦ There are funds available◦ There’s a strong will to make the project succeed

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Focusing on BroadOrganizational Needs

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One categorization is whether the project addresses:◦A problem◦An opportunity, or◦A directive

Another categorization is how long it will take to do and when it is needed

Another is the overall priority of the project

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Categorizing IT Projects

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Financial considerations are often an important consideration in selecting projects

Three primary methods for determining the projected financial value of projects:◦Net present value (NPV) analysis◦Return on investment (ROI)◦Payback analysis

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Financial Analysis of Projects

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Net present value (NPV) analysis is a method of calculating the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time

Projects with a positive NPV should be considered if financial value is a key criterion

The higher the NPV, the better

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Net Present Value Analysis

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Figure 4-4. Net Present Value Example

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Figure 4-5. JWD Consulting NPV Example

Note: See the template called business_case_financials.xls

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Determine estimated costs and benefits for the life of the project and the products it produces

Determine the discount rate (check with your organization on what to use)

Calculate the NPV (see text for details) Notes: Some organizations consider the investment

year as year 0, while others start in year 1; some people enter costs as negative numbers, while others do not◦Check with your organization for their preferences

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NPV Calculations

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Return on investment (ROI) is calculated by subtracting the project costs from the benefits and then dividing by the costs ROI = (total discounted benefits - total discounted costs) /

discounted costs The higher the ROI, the better Many organizations have a required rate of return

or minimum acceptable rate of return on investment for projects

Internal rate of return (IRR) can by calculated by finding the discount rate that makes the NPV equal to zero

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Return on Investment

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Another important financial consideration is payback analysis

The payback period is the amount of time it will take to recoup, in the form of net cash inflows, the total dollars invested in a project

Payback occurs when the net cumulative discounted benefits equals the costs

Many organizations want IT projects to have a fairly short payback period

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Payback Analysis

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Figure 4-6. Charting the Payback Period

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A weighted scoring model is a tool that provides a systematic process for selecting projects based on many criteria

Identify criteria important to the project selection process Assign weights (percentages) to each criterion so they add

up to 100% Assign scores to each criterion for each project Multiply the scores by the weights and get the total

weighted scores The higher the weighted score, the better

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Weighted Scoring Model

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Figure 4-7. Sample Weighted Scoring Model for Project Selection

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Drs. Robert Kaplan and David Norton developed this approach to help select and manage projects that align with business strategy

A balanced scorecard:◦ Is a methodology that converts an organization’s value

drivers, such as customer service, innovation, operational efficiency, and financial performance, to a series of defined metrics

See www.balancedscorecard.org for more information

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Implementing a Balanced Scorecard

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Figure 4-8. Balanced Scorecard Example

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After deciding what project to work on, it is important to let the rest of the organization know

A project charter is a document that formally recognizes the existence of a project and provides direction on the project’s objectives and management

Key project stakeholders should sign a project charter to acknowledge agreement on the need and intent of the project; a signed charter is a key output of project integration management

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Project Charters

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Table 4-1. Project Charter for the DNA-Sequencing Instrument Completion Project

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Table 4-1. Charter (continued)

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A project management plan is a document used to coordinate all project planning documents and help guide a project’s execution and control

Plans created in the other knowledge areas are subsidiary parts of the overall project management plan

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Project Management Plans

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Introduction or overview of the project Description of how the project is organized Management and technical processes used on

the project Work to be done, schedule, and budget

information

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Common Elements of a Project Management Plan

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Table 4-2. Sample Contents for a Software Project Management Plan (SPMP)

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"The winners clearly spell out what needs to be done in a project, by whom, when, and how. For this they use an integrated toolbox, including PM tools, methods, and techniques…If a scheduling template is developed and used over and over, it becomes a repeatable action that leads to higher productivity and lower uncertainty. Sure, using scheduling templates is neither a breakthrough nor a feat. But laggards exhibited almost no use of the templates. Rather, in constructing schedules their project managers started with a clean sheet, a clear waste of time.”*

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What the Winners Do

*Milosevic, Dragan and And Ozbay. “Delivering Projects: What the Winners Do.” Proceedings of the Project Management Institute Annual Seminars & Symposium (November 2001).

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Project execution involves managing and performing the work described in the project management plan

The majority of time and money is usually spent on execution

The application area of the project directly affects project execution because the products of the project are produced during execution

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Project Execution

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Project planning and execution are intertwined and inseparable activities

Those who will do the work should help to plan the work

Project managers must solicit input from the team to develop realistic plans

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Coordinating Planning and Execution

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Project managers must lead by example to demonstrate the importance of creating and then following good project plans

Organizational culture can help project execution by:◦Providing guidelines and templates◦ Tracking performance based on plans

Project managers may still need to break the rules to meet project goals, and senior managers must support those actions

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Providing Leadership and a Supportive Culture

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General management skills like leadership, communication, and political skills

Product, business, and application area skills and knowledge

Use of specialized tools and techniques

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Important Skills for Project Execution

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Expert judgment: experts can help project managers and their teams make many decisions related to project execution

Project management information systems: there are hundreds of project management software products available on the market today, and many organizations are moving toward powerful enterprise project management systems that are accessible via the Internet

See the What Went Right? example of Kuala Lumpur’s Integrated Transport Information System on p. 159

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Project Execution Tools and Techniques

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Changes are inevitable on most projects, so it’s important to develop and follow a process to monitor and control changes

Monitoring project work includes collecting, measuring, and disseminating performance information

A baseline is the approved project management plan plus approved changes

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Monitoring and Controlling Project Work

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The 2002 Olympic Winter Games and Paralympics took five years to plan and cost more than $1.9 billion. PMI awarded the Salt Lake Organizing Committee (SLOC) the Project of the Year award for delivering world-class games.

Four years before the Games began, the SLOC used a Primavera software-based system with a cascading color-coded WBS to integrate planning…The SLOC also used an Executive Roadmap, a one-page list of the top 100 Games-wide activities, to keep executives apprised of progress. Activities were tied to detailed project information within each department’s schedule. A 90-day highlighter showed which managers were accountable for each integrated activity.

Fraser Bullock, SLOC Chief Operating Officer and Chief, said, “We knew when we were on and off schedule and where we had to apply additional resources. The interrelation of the functions meant they could not run in isolation—it was a smoothly running machine.”*

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Media Snapshot

*Foti, Ross, “The Best Winter Olympics, Period,” PM Network (January 2004) 23.

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Three main objectives are:◦ Influencing the factors that create changes to

ensure that changes are beneficial◦ Determining that a change has occurred◦ Managing actual changes as they occur

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Integrated Change Control

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Former view: the project team should strive to do exactly what was planned on time and within budget

Problem: stakeholders rarely agreed up-front on the project scope, and time and cost estimates were inaccurate

Modern view: project management is a process of constant communication and negotiation

Solution: changes are often beneficial, and the project team should plan for them

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Change Control on Information Technology Projects

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A formal, documented process that describes when and how official project documents and work may be changed

Describes who is authorized to make changes and how to make them

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Change Control System

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A formal group of people responsible for approving or rejecting changes on a project

CCBs provide guidelines for preparing change requests, evaluate change requests, and manage the implementation of approved changes

Includes stakeholders from the entire organization

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Change Control Board (CCB)

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Some CCBs only meet occasionally, so it may take too long for changes to occur

Some organizations have policies in place for time-sensitive changes◦ “48-hour policy” allows project team members to make

decisions; then they have 48 hours to reverse the decision pending senior management approval

◦Delegate changes to the lowest level possible, but keep everyone informed of changes

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Making Timely Changes

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Ensures that the descriptions of the project’s products are correct and complete

Involves identifying and controlling the functional and physical design characteristics of products and their support documentation

Configuration management specialists identify and document configuration requirements, control changes, record and report changes, and audit the products to verify conformance to requirements

See www.icmhq.com for more information

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Configuration Management

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Table 4-3. Suggestions for Performing Integrated Change Control

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To close a project or phase, you must finalize all activities and transfer the completed or cancelled work to the appropriate people

Main outputs include:◦ Final product, service, or result transition◦Organizational process asset updates

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Closing Projects and Phases

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Several types of software can be used to assist in project integration management◦Documents can be created with word processing software◦Presentations are created with presentation software◦ Tracking can be done with spreadsheets or databases◦Communication software like e-mail and Web authoring

tools facilitate communications◦Project management software can pull everything together

and show detailed and summarized information◦Business Service Management (BSM) tools track the

execution of business process flows

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Using Software to Assist in Project Integration Management

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Project integration management involves coordinating all of the other knowledge areas throughout a project’s life cycle

Main processes include:◦Develop project charter◦Develop project management plan◦Direct and manage project execution◦Monitor and control project work◦Perform integrated change control◦Close the project or phase

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Chapter Summary